Financial Performance - In Q4 2022, net revenue increased by 9.9% to RMB 2,404.0 million (USD 348.6 million) compared to RMB 2,187.4 million in Q4 2021[4] - For the full year 2022, net revenue rose by 19.3% to RMB 9,325.6 million (USD 1,352.1 million) from RMB 7,818.7 million in 2021[5] - Adjusted EBITDA for Q4 2022 grew by 4.3% to RMB 1,071.5 million (USD 155.3 million), with an adjusted EBITDA margin of 44.6%[4] - The adjusted EBITDA for the full year 2022 increased by 14.8% to RMB 4,251.4 million (USD 616.4 million) compared to RMB 3,703.4 million in 2021[6] - Q4 2022 net loss was RMB 177.9 million ($25.8 million), an improvement from a net loss of RMB 312.9 million in Q4 2021 and RMB 339.7 million in Q3 2022[12] - The company reported a net loss attributable to shareholders of RMB 340,016 thousand for the quarter ended December 31, 2022, compared to RMB 315,888 thousand in the same quarter of 2021[34] - The net loss for the year ended December 31, 2022, was RMB (177,895) thousand, compared to RMB (339,663) thousand for the same period in 2021, representing a decrease of approximately 48%[35] Revenue Breakdown - Service revenue for Q4 2022 was RMB 2,404.0 million ($348.6 million), up 10.0% year-over-year and up 1.5% quarter-over-quarter[9] - The service revenue for 2022 was RMB 9,317.9 million (USD 1,351.0 million), up 19.2% from RMB 7,814.4 million in 2021[15] - Total revenue for the year ended December 31, 2022, was RMB 9,325,631 thousand, up from RMB 7,818,681 thousand in 2021, representing a growth of approximately 19.3%[32] Operational Metrics - The total area signed and pre-signed by customers increased by 12,347 square meters in Q4 2022, reaching 630,716 square meters, a year-on-year increase of 13.3%[7] - The operational area increased by 5,276 square meters in Q4 2022, totaling 515,787 square meters, reflecting a year-on-year growth of 5.7%[7] - The construction area as of December 31, 2022, was 192,713 square meters, with a pre-signing rate of 71.5%[7] - The total area of signed and pre-signed contracts at the end of Q4 2022 was 630,716 square meters, a year-over-year increase of 13.3%[17] - The operational area at the end of Q4 2022 was 515,787 square meters, up 5.7% year-over-year[18] - The construction area at the end of Q4 2022 was 192,713 square meters, representing a year-over-year increase of 19.3%[19] Cost and Expenses - The cost of sales in 2022 was RMB 7,389.8 million (USD 1,071.4 million), representing a 22.4% increase from RMB 6,039.3 million in 2021[15] - Operating expenses for the year ended December 31, 2022, totaled RMB 1,185,080 thousand, compared to RMB 1,021,950 thousand in 2021, indicating an increase of about 16.0%[32] - Interest expense for Q4 2022 was RMB 476.8 million ($69.1 million), a 7.7% increase from Q4 2021 and a 7.3% increase from Q3 2022[12] - The company reported interest expenses of RMB 476,780 thousand for the year ended December 31, 2022[38] Cash and Debt Position - As of December 31, 2022, cash totaled RMB 8,608.1 million (USD 1,248.1 million), while total short-term debt was RMB 6,161.7 million (USD 893.4 million)[20] - The company’s short-term borrowings as of December 31, 2022, were RMB 3,623,967 thousand, a decrease from RMB 5,948,013 thousand in 2021, reflecting a reduction of approximately 39%[31] - The company reported a net cash inflow from financing activities of RMB 4,118,458 thousand for the year ended December 31, 2022[35] - The company experienced a significant increase in operating cash flow, with a net cash provided by operating activities of RMB 1,201,363 thousand for the year ended December 31, 2022[35] Future Outlook - The company expects total revenue for 2023 to be between RMB 9,940 million and RMB 10,320 million, reflecting a year-over-year growth of approximately 6.6% to 10.7%[21] - The company anticipates capital expenditures of approximately RMB 7,500 million for the full year of 2023[21] - The company expects continued growth in the high-performance data center market, driven by increasing demand for cloud computing services in China[30] - Future guidance indicates a cautious outlook due to potential market volatility and regulatory changes impacting operations in China[30] Strategic Initiatives - The company plans to continue expanding internationally while maintaining a strong position in China, as stated by the CEO[7] - The company is focusing on strategic acquisitions and investments to enhance its market position and operational capabilities[30] Financial Metrics and Adjustments - The company utilizes adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, and adjusted gross margin as key performance indicators to assess operational performance and set business targets[23] - The company emphasizes that adjusted financial metrics are often used by analysts and investors to evaluate financial performance within the industry[24] - The adjusted financial metrics do not replace GAAP measures such as gross profit, net profit (loss), or cash flow from operating activities, and should be considered alongside these measures[25] - Preliminary unaudited financial data may undergo adjustments during the year-end audit, potentially leading to significant differences from the initial figures[27] Asset and Liability Overview - Total assets as of December 31, 2022, amounted to RMB 74,813,954 thousand, an increase from RMB 71,632,443 thousand in 2021, reflecting a growth of approximately 4.5%[31] - Total liabilities as of December 31, 2022, were RMB 50,629,299 thousand, up from RMB 45,736,281 thousand in 2021, representing an increase of approximately 10.4%[31] - The company's total equity as of December 31, 2022, was RMB 23,137,643 thousand, a slight increase from RMB 24,533,009 thousand in 2021, showing a decrease of about 5.7%[31] Research and Development - R&D expenses in Q4 2022 were RMB 10.0 million ($1.4 million), down from RMB 12.4 million in Q4 2021 and RMB 6.7 million in Q3 2022[11] - Research and development expenses for the quarter ended December 31, 2022, were RMB 9,986 thousand, compared to RMB 12,422 thousand in the same quarter of 2021, showing a decrease of approximately 19.6%[32]

Financial Performance - For Q3 2022, GDS Holdings reported a net revenue of RMB 2,367.6 million (USD 332.8 million), representing a year-over-year increase of 14.9%[5] - The service revenue for Q3 2022 also increased by 14.9% to RMB 2,367.6 million (USD 332.8 million) compared to Q3 2021[8] - The adjusted EBITDA for Q3 2022 grew by 10.9% to RMB 1,066.6 million (USD 149.9 million), with an adjusted EBITDA margin of 45.0%[5] - The gross profit for Q3 2022 was RMB 492.8 million (USD 69.3 million), an increase of 8.2% compared to Q3 2021[9] - The gross profit margin for Q3 2022 was 20.8%, down from 22.1% in Q3 2021[9] - Net loss for Q3 2022 was RMB 339.7 million (USD 47.7 million), compared to a net loss of RMB 301.1 million in Q3 2021 and RMB 375.3 million in Q2 2022[11] - Total net revenue for the nine months ended September 30, 2022, was RMB 6,921,597 thousand, representing an increase from RMB 5,631,304 thousand for the same period in 2021, a growth of approximately 22.9%[32] - The net loss attributable to shareholders for the three months ended September 30, 2022, was RMB 340,016 thousand, compared to a net loss of RMB 375,357 thousand for the same period in 2021, a reduction of approximately 9.4%[34] - The total comprehensive loss for the three months ended September 30, 2022, was RMB 559,415 thousand, compared to RMB 517,594 thousand for the same period in 2021, indicating an increase of approximately 8.1%[34] Operational Metrics - The total area signed and pre-signed by customers increased by 30,315 square meters to 618,369 square meters, a year-over-year increase of 16.0%[6] - The operational area increased by 6,128 square meters to 510,511 square meters, reflecting a year-over-year growth of 12.4%[6] - The pre-signing rate for the area under construction reached 71.5%, up from 62.1% in the previous year[7] - The billing area increased by 14,184 square meters to 359,862 square meters, a year-over-year increase of 19.8%[7] - Total contracted and pre-contracted area at the end of Q3 2022 was 618,369 square meters, up 16.0% year-over-year and 5.2% quarter-over-quarter[14] - Operating area at the end of Q3 2022 was 510,511 square meters, a 12.4% increase year-over-year and a 1.2% increase quarter-over-quarter[15] - The company achieved a pre-contracted rate of 71.5% for the area under construction at the end of Q3 2022, compared to 62.1% in Q3 2021[15] Expenses and Financing - In Q3 2022, general and administrative expenses were RMB 125.4 million (USD 17.6 million), an increase of 21.9% year-over-year and 26.9% quarter-over-quarter[10] - R&D expenses in Q3 2022 were RMB 6.7 million (USD 0.9 million), down from RMB 9.0 million in Q3 2021 and RMB 9.4 million in Q2 2022[11] - GDS Holdings secured approximately RMB 3.6 billion in new project debt financing during Q3 2022[6] - The company incurred equity incentive expenses of RMB 71,119 thousand for the three months ended September 30, 2022, down from RMB 91,760 thousand in the same period of 2021, a decrease of 22.5%[38] - The company reported interest expenses of RMB 444,328 thousand for the three months ended September 30, 2022, compared to RMB 392,072 thousand for the same period in 2021, an increase of 13.3%[38] Cash and Assets - Cash as of September 30, 2022, was RMB 9,092.4 million (USD 1,278.2 million), with total short-term debt of RMB 5,557.3 million (USD 781.2 million)[19] - As of September 30, 2022, total assets amounted to RMB 71.63 billion, a decrease from RMB 74.88 billion as of December 31, 2021[31] - Cash reserves stood at RMB 9.97 billion, compared to RMB 9.09 billion in the previous year[31] - Total liabilities reached RMB 45.74 billion, down from RMB 50.66 billion as of December 31, 2021[31] - The company reported a total equity of RMB 24.53 billion, an increase from RMB 23.15 billion in the previous year[31] - The net value of property and equipment was RMB 40.62 billion, a decrease from RMB 45.87 billion[31] - The total current liabilities amounted to RMB 13.47 billion, an increase from RMB 11.29 billion[31] - The company’s goodwill and intangible assets net value was RMB 8.36 billion, slightly up from RMB 8.18 billion[31] - The total equity attributable to shareholders was RMB 24.47 billion, compared to RMB 23.05 billion in the previous year[31] Guidance and Future Outlook - The company confirmed its revised guidance for total revenue in 2022 to be between RMB 9,250 million and RMB 9,400 million, with adjusted EBITDA between RMB 4,200 million and RMB 4,280 million[20] - The company is focused on expanding its data center operations to meet broader client requirements beyond its primary locations[28] Performance Metrics and Adjustments - The company utilizes adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, and adjusted gross profit margin as key performance indicators to assess operational performance and set business goals[22] - The company emphasizes that adjusted non-GAAP financial metrics should not be solely relied upon for assessing operational performance, cash flows, or liquidity[24] - The preliminary unaudited financial data presented may undergo adjustments during the year-end audit, potentially leading to significant differences[27] Company Profile and Services - The company operates high-performance data centers strategically located in major economic centers in China, catering to the concentrated demand for such services[28] - The company has a 21-year track record in service delivery, successfully meeting the needs of some of China's largest and most demanding clients for data center outsourcing[28] - The company provides a range of value-added services, including managed network services and hybrid cloud services through direct private links to leading public clouds[28] - The company is neutral to operators and cloud service providers, allowing clients access to all major telecom networks in China[28]

Financial Performance - For Q2 2022, GDS Holdings reported a net revenue of RMB 2,310.4 million (USD 344.9 million), a year-over-year increase of 24.0% from RMB 1,863.9 million in Q2 2021[6]. - Service revenue for Q2 2022 was RMB 2,302.7 million (USD 343.8 million), reflecting a 23.6% increase compared to RMB 1,863.0 million in Q2 2021[6]. - GDS Holdings experienced a net loss of RMB 375.3 million (USD 56.0 million) in Q2 2022, compared to a net loss of RMB 298.5 million in Q2 2021[6]. - The gross profit for Q2 2022 was RMB 468.6 million (USD 70.0 million), a 6.5% increase from RMB 439.9 million in Q2 2021[9]. - Total revenue for the six months ended June 30, 2022, was RMB 4,546,264, an increase from RMB 3,567,443 for the same period in 2021, representing a growth of approximately 27%[31]. - The company reported a net loss of RMB 375,307 for the three months ended June 30, 2022, compared to a net loss of RMB 298,463 for the same period in 2021, indicating a deterioration in performance[31]. - The gross profit for the six months ended June 30, 2022, was RMB 955,018, compared to RMB 836,721 for the same period in 2021, showing an increase of about 14%[31]. - The net loss for the six months ended June 30, 2022, was RMB 748,560 thousand, compared to RMB 675,947 thousand for the same period in 2021, representing an increase of approximately 10.5%[32]. Operational Metrics - The adjusted EBITDA for Q2 2022 grew by 18.6% to RMB 1,062.2 million (USD 158.6 million), with an adjusted EBITDA margin of 46.0%, down from 48.1% in Q2 2021[6]. - The total area signed and pre-signed by customers increased by 13,045 square meters to 588,054 square meters, a year-over-year growth of 16.1%[7]. - The operational area increased by 12,039 square meters to 504,383 square meters, representing an 18.2% year-over-year increase[7]. - The billing area rose by 13,659 square meters to 345,678 square meters, marking a 22.7% increase compared to the previous year[7]. - The adjusted EBITDA for the six months ended June 30, 2022, was RMB 2,113,357 thousand, with an adjusted EBITDA margin of 46.4%[36]. Expenses and Costs - The cost of sales for Q2 2022 was RMB 1,841.8 million (USD 275.0 million), a 29.3% increase from RMB 1,424.1 million in Q2 2021[9]. - The gross margin for Q2 2022 was 20.3%, down from 23.6% in Q2 2021 and 21.7% in Q1 2022, primarily due to rising electricity prices and seasonal increases in electricity consumption[10]. - Sales and marketing expenses for Q2 2022 were RMB 26.3 million (USD 3.9 million), a 20.9% increase from RMB 21.7 million in Q2 2021, but an 8.0% decrease from RMB 28.6 million in Q1 2022[10]. - R&D expenses for Q2 2022 were RMB 9.4 million (USD 1.4 million), compared to RMB 8.6 million in Q2 2021 and RMB 9.8 million in Q1 2022[11]. - Net interest expense for Q2 2022 was RMB 470.8 million (USD 70.3 million), a 14.4% increase from RMB 411.7 million in Q2 2021 and a 3.8% increase from RMB 453.5 million in Q1 2022[11]. Debt and Financing - As of June 30, 2022, cash amounted to RMB 9,159.2 million (USD 1,367.4 million), while total short-term debt was RMB 5,593.7 million (USD 835.1 million) and total long-term debt was RMB 34,118.1 million (USD 5,093.7 million)[15]. - The company has secured new debt financing and refinancing credit of RMB 1,826.0 million (USD 272.6 million) in the second quarter of 2022[15]. - The company completed the sale of a 49% stake in the Ulanqab No. 1 (UL1) data center project, which is a Build-Operate-Transfer (B-O-T) joint venture, with GDS holding 51% and GIC holding 49%[16]. Strategic Initiatives - A framework agreement has been signed to establish an offshore China data center fund with a sovereign wealth fund, with a total investment of RMB 6.7 billion (approximately USD 1 billion), where GDS will manage the projects[17]. - The company is investing in new data center plans and strategic acquisitions to enhance its market position[27]. - GDS anticipates continued growth in the high-performance data center market and related services in China[27]. Market Position and Client Base - GDS Holdings Limited operates high-performance data centers strategically located in major economic centers in China[25]. - The company provides a range of services including managed hybrid cloud services and managed network services, catering to some of China's largest clients[26]. - GDS's client base includes large cloud service providers, internet companies, financial institutions, and multinational corporations[26]. - The company emphasizes the importance of maintaining relationships with new and existing clients in a competitive market[27]. Share Structure and Governance - The company has a dual-class share structure with Class A and Class B ordinary shares, where Class B shares have 20 votes per share in specific matters[38]. - As of June 30, 2022, there were 67,590,336 Class B ordinary shares issued, primarily held by Mr. Huang[38]. - Class B ordinary shares can be converted into Class A ordinary shares at any time, and all Class B shares will convert into Class A shares upon certain conditions being met[39]. - Mr. Huang retains the right to nominate five directors as long as he holds at least 5% of the company's issued share capital[39]. - The quorum for a shareholders' meeting requires at least two eligible shareholders representing not less than one-third of the total voting rights, except for certain specified meetings[40].

Financial Performance - For Q1 2022, GDS Holdings reported a net revenue of RMB 2,243.6 million (USD 353.9 million), representing a year-over-year increase of 31.5% from RMB 1,706.0 million in Q1 2021[5]. - Service revenue for Q1 2022 also grew by 31.6% year-over-year to RMB 2,243.5 million (USD 353.9 million) compared to RMB 1,704.5 million in Q1 2021[5]. - The adjusted EBITDA for Q1 2022 increased by 28.5% year-over-year to RMB 1,051.2 million (USD 165.8 million), with an adjusted EBITDA margin of 46.9%[5][8]. - GDS Holdings experienced a net loss of RMB 373.3 million (USD 58.9 million) in Q1 2022, compared to a net loss of RMB 278.7 million in Q1 2021[5]. - In Q1 2022, the gross profit was RMB 486.4 million (USD 76.7 million), an increase of 22.6% compared to Q1 2021, but a slight decrease of 0.2% from Q4 2021[9]. - The adjusted gross profit for Q1 2022 was RMB 1,174.6 million (USD 185.3 million), up 26.6% year-over-year and 2.3% quarter-over-quarter[9]. - The net loss for Q1 2022 was RMB 373.3 million (USD 58.9 million), compared to a net loss of RMB 278.7 million in Q1 2021 and RMB 312.9 million in Q4 2021[11]. - The adjusted EBITDA for Q1 2022 was RMB 1,051.2 million (USD 165.8 million), representing a 28.5% increase from Q1 2021 and a 2.3% increase from Q4 2021[12]. - The adjusted gross margin for Q1 2022 was 52.4%, down from 54.4% in Q1 2021 and slightly up from 52.5% in Q4 2021[9]. - The company reported a net loss attributable to the shareholders of the company for the three months ended March 31, 2022, was RMB 574,466, compared to RMB 350,688 for the same period in 2021, representing an increase in loss of approximately 63.9%[34]. - The company reported a net loss per ordinary share of RMB 0.39 for the three months ended March 31, 2022, compared to RMB 0.24 for the same period in 2021, reflecting a significant increase in loss per share[34]. Operational Metrics - The total contracted and pre-contracted area increased by 24.5% year-over-year to 575,009 square meters as of March 31, 2022[6]. - The operational area increased by 36.6% year-over-year to 492,344 square meters as of March 31, 2022[6]. - The billing area increased by 32.2% year-over-year to 332,019 square meters as of March 31, 2022[7]. - As of March 31, 2022, the pre-contracted rate for the area under construction was 63.1%, down from 70.0% a year earlier[6]. - The total area of signed and pre-signed contracts at the end of Q1 2022 was 575,009 square meters, a year-over-year increase of 24.5% and a quarter-over-quarter increase of 3.3%[14]. - The operational area at the end of Q1 2022 was 492,344 square meters, a 36.6% increase year-over-year and a 0.9% increase quarter-over-quarter[15]. - The construction area at the end of Q1 2022 was 168,128 square meters, a decrease of 1.2% year-over-year but an increase of 4.1% quarter-over-quarter[15]. - The operational area signing rate was 95.3% at the end of Q1 2022, compared to 95.0% at the end of Q1 2021[16]. Strategic Initiatives - GDS Holdings raised USD 620 million through a private placement of convertible preferred notes in Q1 2022 to support future business development[7]. - The company is advancing its regionalization strategy by collaborating with YTL to develop green data center parks in Malaysia, enhancing its influence in Southeast Asia[7]. - SH18 Phase I will generate a net data center area of 6,680 square meters, with a pre-signing rate of 67.5%, expected to commence operations in the second half of 2022[16]. - WH1 Phase II will produce a net data center area of 2,800 square meters, expected to be operational in the first half of 2023[16]. - The company completed the acquisition of a data center site in Wuhan, which will yield a total net data center area of approximately 8,400 square meters upon full development[16]. - The company plans to develop a data center park in Malaysia with a total net area of approximately 18,000 square meters, expected to be delivered in 2024[16]. - The company has acquired a majority stake in an undeveloped site in Hebei, which could yield approximately 30,000 square meters of net data center area upon full development[17]. - The company has completed the acquisition of a data center in Shenzhen, which will generate approximately 7,089 square meters of net data center area[19]. - The company has partnered with YTL Power to develop a green data center park in Malaysia with a total capacity of 500 megawatts, expected to be operational in 2024[20]. - The company signed a share purchase agreement to sell 49% of the Ulanqab 1 data center project, which will become a Build-Operate-Transfer (B-O-T) joint venture[21]. Financial Guidance and Metrics - The company maintains its full-year 2022 guidance with total revenue expected between RMB 9,320 million and RMB 9,680 million, adjusted EBITDA between RMB 4,285 million and RMB 4,450 million, and capital expenditures around RMB 12,000 million[22]. - The adjusted EBITDA and adjusted gross profit are used as key performance indicators to assess operational performance and set business targets[25]. - The company emphasizes that depreciation and amortization are fixed costs that begin as soon as each data center is operational, impacting gross profit calculations[25]. - The company’s financial data is subject to potential adjustments during the year-end audit, which may lead to significant differences from preliminary unaudited financial information[28]. - The company’s non-GAAP financial metrics are frequently used by analysts and investors to measure financial performance within the industry[26]. Balance Sheet Highlights - The total assets of GDS Holdings Limited as of March 31, 2022, amounted to RMB 75.67 billion, compared to RMB 71.63 billion as of December 31, 2021, reflecting an increase of approximately 5.7%[33]. - The total liabilities of GDS Holdings Limited as of March 31, 2022, were RMB 50.67 billion, up from RMB 45.74 billion as of December 31, 2021, indicating an increase of about 10.5%[33]. - The cash and cash equivalents as of March 31, 2022, were RMB 11.32 billion, compared to RMB 9.97 billion as of December 31, 2021, representing a growth of approximately 13.5%[33]. - The accounts receivable, net of allowance for doubtful accounts, stood at RMB 11.32 billion as of March 31, 2022, compared to RMB 9.97 billion as of December 31, 2021, marking an increase of around 13.5%[33]. - GDS Holdings Limited's total equity as of March 31, 2022, was RMB 24.04 billion, compared to RMB 24.53 billion as of December 31, 2021, showing a decrease of approximately 2%[33]. - The company reported a net loss of RMB 4.28 billion for the period ending March 31, 2022, compared to a net loss of RMB 3.91 billion for the same period in the previous year, indicating a worsening of approximately 9.5%[33]. - GDS Holdings Limited's total current liabilities as of March 31, 2022, were RMB 13.22 billion, compared to RMB 13.47 billion as of December 31, 2021, reflecting a decrease of about 1.9%[33]. - The company’s long-term borrowings, excluding the current portion, were RMB 19.59 billion as of March 31, 2022, compared to RMB 18.28 billion as of December 31, 2021, representing an increase of approximately 7.1%[33]. - The company’s goodwill and intangible assets as of March 31, 2022, were RMB 8.30 billion, slightly down from RMB 8.36 billion as of December 31, 2021, indicating a decrease of about 0.7%[33]. - GDS Holdings Limited's total liabilities and equity as of March 31, 2022, were RMB 75.67 billion, compared to RMB 71.63 billion as of December 31, 2021, reflecting an increase of approximately 5.7%[33].

Regulatory Environment - The company operates primarily in China, relying on complex contractual arrangements to control its VIE operations due to foreign investment restrictions[6]. - There is significant uncertainty regarding the interpretation and application of current and future Chinese laws affecting the company's contractual rights[6]. - The company faces various risks related to operating in China, including regulatory approvals and data security regulations, which could adversely impact its operations and the value of its American Depositary Shares[7]. - The potential for severe penalties exists if the company's contractual arrangements are found to violate any current or future Chinese laws or regulations[8]. - The company may face significant compliance costs due to changes in policies or regulations imposed by the Chinese government[7]. - The company is subject to various legal and operational risks due to its primary operations being based in China, which may lead to significant uncertainties[8]. - The company must obtain necessary licenses and permits from Chinese authorities to operate its business, which includes value-added telecommunications business licenses[12]. - The company is subject to restrictions under Chinese laws regarding the payment of dividends and transfer of net assets from its subsidiaries and VIE[9]. - The company’s ability to issue securities may be severely restricted by the Chinese government's regulatory powers[7]. - The company is actively adapting to the evolving regulatory landscape to ensure compliance and operational continuity[93]. - The company is subject to evolving regulations in China, which may require obtaining additional licenses and permits for its operations[82]. - The 2019 Foreign Investment Law in China aims to unify domestic and foreign investment regulations, replacing previous laws and establishing a negative list management system[83]. - Foreign investors must report investment information through the enterprise registration system and face penalties for non-compliance, ranging from RMB 100,000 to RMB 500,000[84]. - The National Development and Reform Commission and the Ministry of Commerce issued regulations for foreign investment security reviews, effective January 18, 2021[84]. - Foreign investors in China are limited to a maximum ownership of 50% in value-added telecommunications enterprises[86]. - The Negative List (2021) reduces the number of industries restricted for foreign investment, but value-added telecommunications services, including internet data center services, remain restricted[85]. - The Ministry of Industry and Information Technology (MIIT) requires foreign investors to establish foreign-invested enterprises and obtain telecommunications business licenses[86]. - The MIIT's regulations mandate that telecommunications operators must possess the necessary facilities for their approved business operations[87]. - The telecommunications business operating license is valid for five years and must be approved by the MIIT for cross-regional operations[88]. - The MIIT has eliminated prior approval for foreign investment in value-added telecommunications businesses, integrating it into the business license approval process[86]. - The MIIT retains the right to revoke licenses for non-compliance with regulations[86]. - The company is required to conduct annual data security assessments if it is a data processor going public overseas, particularly if it handles over 1 million users' personal information[108]. - The company must comply with strict regulations regarding user information security and privacy under the Personal Information Protection Law (PIPL)[104]. - The Cybersecurity Law mandates that operators store personal information and important data within China, affecting operational strategies[105]. - The company is facing regulatory challenges that may limit its ability to expand data center operations in key markets[101]. - The company must adapt to evolving regulations that impact the collection and processing of personal information[104]. - The new regulations may influence the company's market strategy and operational costs in the long term[101]. - The company is navigating a complex regulatory environment that affects its data management and security practices[104]. Financial Performance - GDS Holdings Limited's revenue contribution from VIE and its subsidiaries was 97.4%, 95.0%, and 96.1% for the years 2019, 2020, and 2021 respectively[5]. - The company reported a total revenue of $1.2 billion for the fiscal year 2021, representing a year-over-year growth of 15%[97]. - The company's net revenue increased from RMB 4,122.4 million in 2019 to RMB 5,739.0 million in 2020 (39.2% growth), and further to RMB 7,818.7 million in 2021 (36.2% growth)[17]. - The adjusted EBITDA rose from RMB 1,824.0 million in 2019 to RMB 2,680.6 million in 2020, and reached RMB 3,703.4 million in 2021[17]. - The company experienced a net loss of RMB 442.1 million in 2019, which increased to RMB 1,191.2 million in 2021[17]. - The company's net loss increased from RMB 442.1 million in 2019 to RMB 669.2 million in 2020, and further to RMB 1,191.2 million in 2021[148]. - The company reported a net income of RMB 7,818.7 million for the year ended December 31, 2021, with a net loss of RMB 1,191.2 million after adjustments[197]. - The company’s total revenue from non-variable interest entities was RMB 5,509.95 million in 2021, reflecting significant growth in service and equipment sales[198]. - The company’s gross profit for 2021 was RMB 1,779,429, which is a 14.8% increase from RMB 1,550,451 in 2020[180]. - The gross profit margin decreased to 22.8% in 2021 from 27.0% in 2020, indicating a decline in profitability[182]. - The company incurred net interest expenses of RMB 1,604,292 in 2021, which is 20.5% of net revenue[180]. - The effective tax rate for the company in China is 25%, with a reduced rate of 15% for entities recognized as "high-tech enterprises"[176]. - The company’s sales cost for 2021 was RMB 6,039,252, which is 77.2% of net income, compared to 73.0% in 2020[160]. - The company’s sales cost rose by 44.2% from RMB 4,188.5 million in 2020 to RMB 6,039.3 million (USD 947.7 million) in 2021, primarily due to a 56.9% increase in utility costs and a 58.9% increase in depreciation and amortization costs[190]. - The percentage of sales cost to net revenue increased from 73.0% in 2020 to 77.2% in 2021[190]. - The company reported total liabilities of RMB 45,736,281 thousand, compared to RMB 30,591,073 thousand, reflecting an increase of about 49%[199][200]. - The company’s total equity was RMB 24,533,009 thousand, a slight increase from RMB 25,565,992 thousand, indicating a decrease of approximately 4%[199][200]. - The company reported a significant increase in user data, with a total of 46 million registered domain names as of the end of 2021[113]. - The company achieved a revenue growth of 20% year-over-year, driven by increased demand for its services in the domain registration sector[113]. - The company anticipates continued growth in user demand, projecting a 25% increase in active users by the end of 2022[99]. Operational Performance - The company serves 760 customers, including major cloud service providers and large internet companies, with agreements typically lasting 3 to 10 years for cloud providers and 1 to 5 years for financial and enterprise clients[16]. - The total net floor area in operation was 487,883 square meters, with 93.8% contracted by customers[14]. - The total net floor area under construction was 161,515 square meters, with 61.3% pre-contracted by customers[14]. - The average quarterly customer churn rate was 0.4% in 2021, down from 0.8% in 2020 and 0.5% in 2019, reflecting low instances of contract non-renewal or early termination[23]. - The operational area signing rates were 92.1%, 94.6%, and 93.8% for the years ending December 31, 2019, 2020, and 2021, respectively[151]. - The company aims to maintain high billing rates for its data center facilities, which are crucial for maximizing profitability[153]. - The ability to acquire suitable land or buildings for new data centers is critical for revenue growth and operational performance[150]. - The company plans to continue seeking strategic partnerships and acquisitions to expand its business[157]. - The operational area, signed capacity, and billing rates are key performance indicators for assessing the company's performance[158]. - The company has a strong performance in contract signing, with several data centers achieving a signing rate of 100%[38]. - The company has strategically located data centers in major economic hubs such as Shanghai, Beijing, Shenzhen, Guangzhou, Hong Kong, Chengdu, and Chongqing[15]. - The company has initiated the construction of Southeast Asia strategic development data centers in Singapore to meet regional customer needs[15]. - The company has a total estimated developable net floor area of approximately 475,239 square meters for future expansion[27]. - The company is developing multiple data centers, with significant areas under construction in key markets such as Beijing-Tianjin-Hebei and the Yangtze River Delta[38]. - The company has a commitment to expand its data center capacity in Southeast Asia, with an estimated 28,000 square meters available for future development[41]. - The company has a strategic focus on acquiring land and entering binding framework agreements with local governments for future data center developments[40]. Customer Relationships - The company has successfully attracted major public cloud platforms to host their services in its data centers, enhancing direct private connectivity for enterprise clients[49]. - The company provides consulting services for clients transitioning from physical hosting to cloud computing, enhancing its service offerings[50]. - The company aims to establish strategic partnerships with key customers, particularly large cloud service providers and internet companies, to enhance the value of its data center ecosystem[56]. - The majority of sales agreements have service terms ranging from three to ten years for cloud service providers and large internet customers, and one to five years for financial institutions and corporate clients[57]. - In 2021, two clients contributed 23.7% and 22.2% of the company's total net revenue, indicating a reliance on a small number of key customers[54]. - As of December 31, 2021, cloud service providers, large internet companies, and financial institutions accounted for 69.1%, 19.8%, and 11.1% of the total contracted area, respectively[55]. - The top two customers represented 40.5% and 16.6% of the total contracted area, with no other customer exceeding 10%[55]. - The average customer satisfaction score was 9.585 out of 10, with a net promoter score of 83.4% based on a survey conducted by NielsenIQ[62]. Technology and Innovation - The company has developed a proprietary data center operations management platform that provides real-time information on operational performance, streamlining management processes[53]. - The company is developing an innovative service platform to help enterprise clients integrate and control their hybrid cloud computing environments, combining private servers with one or more public cloud service providers[50]. - The company has invested in research and development for new technologies aimed at improving data center efficiency and sustainability[99]. - The company has outlined a strategic goal to enhance customer service, targeting a 30% improvement in customer satisfaction scores by the end of 2022[113]. - The company has established a modular approach to develop and install data center facilities, which shortens development time and reduces costs[65]. - The company has registered 65 patents and has 60 patent applications in China as of December 31, 2021[66]. - The company has achieved multiple ISO certifications, including ISO9001, ISO20000, ISO27001, ISO14001, ISO45001, and ISO50001, demonstrating its commitment to quality and operational excellence[53]. Environmental Commitment - The company has committed to achieving carbon neutrality by 2030 and using 100% renewable energy for its data centers[74]. - In 2021, over 30% of the company's electricity consumption came from renewable energy sources[74]. - The average Power Usage Effectiveness (PUE) of the company's self-developed data centers in stable operation was approximately 1.3 in 2021[74]. - The company has signed an agreement to procure approximately 30,000 GWh of green power certificates from 2021 to 2030[74]. - The company is focusing on energy efficiency, with a goal to reduce energy consumption intensity across its operations[99]. Corporate Governance - The company controls 62 subsidiaries in China through GDS Investment Company, with significant operational structures established to comply with local regulations[132]. - The management holding company is owned by five designated management shareholders, each holding 20% equity, enhancing corporate governance and risk distribution[136]. - The company has established contractual arrangements with its VIEs, including exclusive technology licenses and service agreements, to secure economic benefits and operational control[134]. - The company has implemented a series of agreements to ensure effective control over its consolidated VIEs and their subsidiaries[134]. - The company’s governance structure aims to mitigate risks by distributing ownership among multiple management shareholders and establishing a board for the VIEs[136]. - GDS Investment Company has pledged all its equity in GDS Beijing and GDS Shanghai as collateral to ensure compliance with various agreements, including exclusive technology licensing and service agreements[137]. Market Expansion - The company expanded its footprint to Hong Kong in 2018 by acquiring an industrial property for conversion into a data center[129]. - In 2021, the company entered the Macau market and initiated a Southeast Asia plan, acquiring two undeveloped plots in Malaysia and Indonesia[129]. - The company plans to expand its market presence by entering new regions, aiming for a 15% increase in market share by 2023[113]. - The company is exploring potential acquisitions to bolster its service offerings, with a focus on companies that complement its existing portfolio[113]. - The company is actively pursuing mergers and acquisitions to enhance its market presence and technological capabilities[97]. Employee and Training - As of December 31, 2021, the company had 1,878 employees, with 69.2% in managed services and 20.8% in management, finance, and administration[79]. - The company provides an average of 38.2 hours of training per employee annually[76]. - The company expects to continue increasing its workforce and expanding its research and development centers, leading to higher R&D expenses in the future[169]. Legal Matters - GDS Holdings faced a securities class action lawsuit related to alleged misreporting of data center metrics and acquisition prices from March 29, 2018, to July 31, 2018[81]. - The lawsuit was dismissed by the court on April 7, 2020, after the defendants filed a motion to dismiss and subsequently withdrew the case[81].

Operational Capacity and Development - As of December 31, 2020, the total net floor area in operation was 318,272 square meters, with 94.3% contracted by customers[4] - The total net floor area under construction was 137,070 square meters, with 73.9% pre-contracted by customers[4] - The company operates 51 self-developed data centers with a total net floor area of 310,128 square meters, and approximately 19 third-party data centers with a total net floor area of 8,144 square meters[6] - The total estimated developable net floor area held by the company for future potential development is approximately 480,000 square meters[6] - The company has 14 new self-developed data centers and two existing self-developed data centers under construction, with a total net floor area of 137,070 square meters[6] - As of December 31, 2020, the total signed area (excluding B-O-T joint venture data centers) was 401,554 square meters, with operational area and area under construction being 300,213 square meters and 101,341 square meters respectively[12] - The company constructed 12 new self-developed data centers in first-tier markets in 2020, with a total net room area of 65,866 square meters[10] - The total net room area under construction as of December 31, 2020, was 137,070 square meters, of which 73.9% was pre-signed[10] - The operational area (excluding B-O-T joint venture data centers) as of December 31, 2020, was 310,128 square meters[11] - The company has approximately 480,000 square meters of estimated total developable net room area in first-tier markets for potential future development[13] Market Demand and Strategic Positioning - The demand for high-performance data center services in China is driven by rapid data growth due to digital transformation and the application of new technologies such as cloud computing and AI[4] - The Chinese government supports technology-driven development and digital economy growth, promoting "new infrastructure construction" which includes large data centers[4] - The company operates data centers primarily in major economic hubs such as Shanghai, Beijing, Shenzhen, Guangzhou, Hong Kong, Chengdu, and Chongqing[5] - The strategic locations of the data centers provide convenient connectivity and access to extensive multi-operator telecom networks, enhancing facility performance and reducing connection costs[5] - The high-performance data center capacity in key economic hubs is relatively scarce due to challenges in acquiring suitable land and regulatory approvals[5] - The ongoing investment wave in the economy driven by government policies is expected to create numerous business opportunities for the company in the future[4] Financial Performance - Net revenue increased from RMB 2,792.1 million in 2018 to RMB 4,122.4 million in 2019, representing a growth of 47.6%, and further increased to RMB 5,739.0 million (USD 879.5 million) in 2020, a growth of 39.2%[8] - The cumulative net loss grew from RMB 430.3 million in 2018 to RMB 669.2 million (USD 102.6 million) in 2020[8] - Adjusted EBITDA rose from RMB 1,046.5 million in 2018 to RMB 2,680.6 million (USD 410.8 million) in 2020[8] - The signing rate for contracts was 94.9%, 91.9%, and 94.3% for the years ending December 31, 2018, 2019, and 2020, respectively[8] - The billing rates increased from 67.6% in 2018 to 71.1% in 2020[8] - The pre-signing rate for contracts improved from 48.4% in 2018 to 73.9% in 2020[8] - The company focuses on developing high-performance data centers with large net floor areas and high power capacity[8] - The company aims to maintain high signing rates across its data centers[8] Customer Base and Retention - As of December 31, 2020, the company served 703 customers, including major cloud service providers and large internet companies in China and globally[6] - The average quarterly customer churn rates for the years ending December 31, 2018, 2019, and 2020 were 0.9%, 0.5%, and 0.8% respectively, indicating strong customer retention[9] - The company aims to maintain high levels of revenue visibility due to long-term customer agreements and a significant backlog of orders[9] - The company’s cloud service providers, large internet, financial institutions, and enterprise customers accounted for 76.7%, 14.1%, and 9.2% of total contracted area as of December 31, 2020[37] Managed Services and Innovations - The company offers managed services, including direct private connections with leading public clouds and innovative hybrid cloud management platforms[4] - The company has developed an innovative service platform to assist enterprise customers in managing their IT infrastructure[6] - The company provides a range of managed services, including business continuity and disaster recovery solutions, network management, data storage, and system security services[32] - The company has developed a proprietary data center operations management platform that provides real-time information on various aspects of data center performance[36] - The company is developing an innovative service platform to assist enterprise clients in integrating private servers with one or more public cloud service providers[34] Regulatory Compliance and Legal Matters - GDS operates its internet data center business through a VIE structure due to Chinese regulations restricting foreign ownership in value-added telecommunications services[59] - The Chinese legal framework for foreign investment includes a negative list, which prohibits foreign investment in certain sectors, and GDS must comply with these regulations to operate[60] - The company is subject to regulatory oversight by the China Banking and Insurance Regulatory Commission, ensuring compliance with laws and regulations related to outsourcing services[68] - The company must adhere to strict guidelines regarding the management of outsourcing service providers, including risk assessments and service quality standards[68] - GDS Holdings Limited is committed to ongoing collaboration with regulatory bodies to ensure adherence to industry standards and best practices[68] Sustainability and Environmental Initiatives - Over 20% of the company's electricity consumption in 2020 came from renewable energy sources[49] - The company has 15 self-developed data centers that have received green certifications from leading domestic and global institutions[50] - Three data centers have received LEED certification, with two achieving Gold status[50] - The company is actively seeking to increase the use of renewable energy, including potential direct contracts with renewable energy suppliers[49] - The company has signed letters of intent to secure future supplies of International REC (I-REC) energy certificates to offset carbon emissions[49] Employee and Organizational Structure - As of December 31, 2020, the company had 1,479 full-time employees, with 17% being women[52] - The employee turnover rate for 2020 was 17.0%, down from 18.2% in 2019[55] - The company has a diverse workforce, with women comprising 34% of senior management and 18% of board members[52] - The company provides competitive compensation and benefits, including performance bonuses and stock options for employees[55] - The company has established a health and safety management system based on ISO45001 to ensure a safe working environment[52] Future Outlook and Growth Strategies - The company is focused on resource acquisition, feasibility analysis, technical design, cost estimation, and project management to maintain operational efficiency[34] - The company plans to invest in innovative technologies to enhance data processing capabilities and improve service delivery[70] - The company is exploring potential mergers and acquisitions to enhance its service offerings and market presence[64] - The company aims to maintain a foreign investment cap of 50% in joint ventures, ensuring compliance with local laws while attracting international partners[64] - Overall, the company is optimistic about future growth, driven by strategic initiatives and a robust user base[64]